1

COMBINING THE BENEFITS OF

DIGITAL ADVERTISING WITH

THE POWER OF THE BIG SCREEN.

ADDRESSABLE ADS ARE SHAPING THE FUTURE

OF TV MARKETING New technological capabilities make it possible to use targeted

advertising on television. This new form of advertising is referred to as addressable advertising. This paper provides an overview of how this technology works, how it impacts the current TV advertising

ecosystem, and which players benefit from it.

Leen De Schaepdrijver, Prof Dr Philippe Baecke,

Prof Dr Koen Tackx, Jeroen Coeymans,

Lode Lauwers, Bert Van Driessche

2

CONTENTS

CONTEXT 3 EXECUTIVE SUMMARY 4 INTRODUCTION 6 HOW DOES IT WORK? 9 THE CURRENT TV ADVERTISING LANDSCAPE 11 THE TV ADVERTISING ECOSYSTEM 14 THE IMPACT OF ADDRESSABILITY ON THE TV ECOSYSTEM 16 THE CHALLENGES 19

DATA AND MEASUREMENT 19 PRIVACY AND ETHICS 20 INERTIA 22 COST 23 SCALE AND STANDARDISATION 23 ADDRESSABLE ADVERTISING: THE BEST OF BOTH WORLDS 25 BENEFITS FOR STAKEHOLDERS 28 THE CONSUMER 28 THE ADVERTISER 28 THE BROADCASTER 29 THE DISTRIBUTOR 29 THE MEDIA AGENCY 30 CONCLUDING COMMENTS 31 REFERENCES 32

3

This paper is the result of a joint

research project by Vlerick Business

School, Telenet and SBS Belgium.

Local media companies, and by

extension the entire local media

ecosystem, are being pushed aside by

international tech giants such as

Google and Facebook. For various

reasons, more and more companies

are choosing to advertise through

international digital companies. So,

the creation and distribution of ads is

shifting to players outside the local

ecosystem, which results in value

disappearing from this ecosystem.

Belgium, and especially its northern region

Flanders, has a unique media landscape

with a heavy focus on local quality

content1. To ensure strong, engaging

content, media companies rely on revenue

that comes from advertising. In order to

shift some of this value back to the local

ecosystem, Telenet and Vlerick joined

forces in a strategic research partnership.

This research aims to map out the TV

advertising ecosystem, define threats and

opportunities, and provide solutions

focused on the role that data can play in

TV advertising.

As one of the leading media companies in

Belgium, Telenet constantly invests in

research. The company strives to gain

more insight into the ins and outs of the

media landscape and changing consumer

behaviour to ensure a future-proof,

customer-centric approach. Following

earlier studies focusing on the drivers of

ad blocking2 (among other things), this

study extends our knowledge on

1 Coeymans, J. (2020); Vlaamse regulator voor de media (2018)

innovative advertising formats. The key

goal is to develop a guide on the current

state of addressable advertising

technology on TV. Telenet provides

experience, knowledge, and data to

support this research project.

Vlerick Business School was approached

by Telenet to conduct this research under

a Knowledge Partnership. In this

partnership, Telenet provides funding in

return for various services, including

having a full-time PhD student work on

this topic. Vlerick is conducting this

research commissioned by Telenet in an

objective and academic manner. The

school draws on its management and

business expertise, as well as its academic

track record, to provide Telenet with

unbiased research output and guide them

in solving business questions related to

innovative advertising models and the

value of data.

SBS Belgium, the first broadcaster in

Belgium to roll out addressable advertising

on TV, provides the third angle in this

research cooperation. They offer valuable

input in their roles as broadcaster and

advertising sales house.

With this white paper, we provide a

general framework of where the

technology of addressable advertising on

TV currently stands. We look at the TV

advertising ecosystem as it has been for

the last few decades, and we describe how

addressable technology is impacting this

ecosystem. We list the challenges and the

new value proposition and then conclude

with the benefits for the different

stakeholders.

2 Joris, G., Poels, K., Mechant, P., Pabian, S., & De Marez, L. (2018)

CONTEXT

4

Addressable advertising is an innovative

advertising technique on TV that brings

together the benefits of TV advertising

and those of digital advertising. TV

advertising boasts some strong and

unique features, such as: the unparalleled

reach, the scale of attention, the freedom

with which marketers can convey their

messages on the big screen, brand safety

and the sense of prestige that is still

invoked by advertising on TV. Thanks to

these characteristics, TV has been a

trusted advertising medium for most

brands and the TV advertising ecosystem

has never really been challenged in a long

time.

However, various factors are threatening

the comfortable position that TV

advertising has been in for the last few

decades. Both consumers and marketers

are changing their behaviour and

expectations, and digital advertising is

taking advantage of this new vacuum by

answering their needs.

Consumers on the one hand are dividing

their time between many different

channels, expecting to get content

whenever and wherever they want.

Interactions with brands need to be

relevant for them, and advertising

avoidance is increasing.

Marketers on the other hand are adapting

to this changing consumer behaviour by

including digital channels in their

marketing mix. On top of that, they are

getting to know the power of data, using it

both to target the right audience and

personalise their message, and to report

back to their superiors with clear insights

and metrics. Meanwhile, lagging behind in

campaign measurement capabilities, TV is

pushing data-focused marketers away and

into the arms of digital giants such as

Facebook and Google.

Thanks to rapidly changing technology, TV

is now able to offer new initiatives – such

as addressable advertising – that provide

an opportunity to combat the dominance

of the digital giants. Addressable

advertising enables TV to combine the

best of both worlds by making it possible

to target specific households via their set

top box with TV ads and by offering

opportunities to improve campaign

measurement. However, there are still

some challenges ahead before this new

technique will be up to par with digital

advertising on those capabilities.

If the industry can overcome these

challenges, the benefits for the different

stakeholders in the TV advertising

ecosystem are manifold. Starting with the

EXECUTIVE SUMMARY

5

consumers, they will benefit from more

relevant advertising and, in the long run,

possibly a lower ad burden, as less ad

waste decreases the number of ads

needed.

For the advertiser, the benefits are

probably most obvious. They can tell their

story better, benefiting from the strengths

of the big screen whilst targeting specific

segments. They will have access to

stronger measurement options and can

adapt their message based on data and

detailed insights. Furthermore, ad fatigue

will most likely go down. And not to be

underestimated: addressable advertising

opens the floor to smaller advertisers that

have never been able to afford advertising

on TV.

For the broadcaster and the distributor,

this translates into new customers. A

study from Sky, one of the forerunners of

addressable TV, shows that more than

50% of addressable advertising customers

are new-to-TV brands3. Ad revenues can

potentially go up, which will benefit the

content offering, which will in its turn

benefit the pay product of distributors as

well.

3 Sky (2019)

6

With the rise of digital media and the disruptive evolution of big data, the media landscape has gone through

turbulent times. Technology is developing more rapidly than ever,

and we are now able to collect and process data in volumes and formats that we never could before. Digital

companies were the first to jump on this train of technological revolution

and are now harnessing the power of data. Where the TV landscape had barely changed during the past

decades, it is now feeling the heat of digitisation. Digital channels are

offering interesting alternatives to linear TV in terms of content and

experience, and digital advertising has been growing exponentially during the last decade.4 In turn, TV has reacted

with digital initiatives of its own, blurring the distinction between

traditional media and digital media. Nonetheless, there is still a long road ahead before they get to par with the

tech giants and truly adopt a technology- and data-driven way of

working. It is safe to say that digitisation has shaken the entire TV ecosystem to its foundations.

4 Loesche D. (2017)

INTRODUCTION

7

In the past few years, TV technology has

been evolving rapidly, preparing itself for

the next step. With new and significantly

improved set top boxes, TVs are now able

to distribute content targeted at specific

households. Although TV is traditionally

seen as the best medium for awareness

campaigns, this technological evolution

could be an opportunity for TV advertising

to also start playing a strong role further

down the sales funnel (see Figure 1).

Moreover, this technology could provide

telco companies and broadcasters with an

answer to the predominance of digital

advertising giants such as Facebook and

Google.

With that goal in mind, telecom companies

are launching smart advertising initiatives

beyond linear TV that allow advertisers to

target their TV advertisements to the

audience of their choice instead of having

to launch campaigns for the whole

population at once. This new technique is

called addressable advertising: a

technique that combines precise targeting

with the strengths of ‘the big screen’ and

the unparalleled reach of television.

Addressable advertising works in a way

similar to most digital advertising. Instead

of buying ad inventory within specific

shows or on certain channels, marketers

can now target segments based on socio-

demographic data, region, lifestyle, and

other attributes such as TV viewing

behaviour. Ads will only be shown when

this segment is watching – regardless of

the show, channel, or timing. Addressable

advertising is based on a ‘pay per view’

model, which is more in line with digital

advertising performance measurement.

These new initiatives go completely

against the traditional way of advertising

on television, where ad inventory is

bought upfront based on the estimated

exposure of a specific show on a specific

channel.

FIGURE 1: THE ROLE OF TV ADVERTISING IN THE SALES FUNNEL

8

Addressable advertising has many

benefits. It allows you to target very

specific audiences, thus increasing the

relevance for end-consumers and reducing

ad waste dramatically. Furthermore, it

opens the door to more detailed campaign

measurement and reporting. And last but

not least, addressable advertising creates

possibilities for the smaller advertisers,

who are typically not able to run large TV

campaigns targeted at the whole

population.

However, there are still some

uncertainties and risks involved with

addressable advertising. To reach its full

potential and get up to par with digital

advertising, it must still undergo a big

evolution. Gartner, for example, positions

programmatic TV advertising5 in the first

phase of its 2018 Hype Cycle in marketing

and advertising technologies, claiming it

will only reach its plateau in 10 years.6

5 Programmatic TV advertising = an automated and data-driven approach to

buying and delivering ads against video content on television. In programmatic TV advertising, TV ad space is bought

Scale and standardisation, issues related

to privacy, data capabilities and industry

inertia in general are just some of the

challenges ahead. We cover the main

challenges further in this paper.

Although addressable advertising is still in

its infancy, a new report argues that

“addressable TV advertising will leap from

$15.6 billion (€13.9 billion) in total

worldwide revenue in 2019 to almost 6

times that value at $85.5 billion (€76.3

billion) by 2025.”7 As there is still much

confusion and doubt around this fast-

growing technology, this paper explains in

detail how addressable TV advertising

works, how it could change the current TV

landscape, and how it affects the different

stakeholders in the TV advertising

ecosystem.

automatically in real-time via bidding, similar to real-time bidding for

display ads, for example. 6 Gartner (2018) 7 Anasia D’mello (2020)

“ Addressable advertising creates possibilities for the smaller advertisers, who are typically not able to run large TV campaigns targeted at the whole population.

9

The idea behind addressable advertising is

to stop guessing what content your

audience is watching, and instead target

your audience regardless of what they are

watching. Broadcasters or ad sales houses

join forces with TV distributors, who in

their turn work together with software and

technology vendors of addressable

advertising technology.8 The latter offer

the tools to deliver targeted

advertisements and measure campaign

effectiveness and ROI. In short,

addressable advertising consists of 3

steps.

1. Addressable advertising is

audience-based. This means that the first

step for advertisers is to define their

target segment. Typically, broadcasters

offer advertisers a range of basic

8 Among others: Invidi, Cadent, Visible World, YCD, Spot Runner, …

attributes to choose from, based on socio-

demographic and viewing data. Additional

data such as lifestyle data (hobbies, pet-

owners, …) or more detailed information

on housing or neighbourhoods (type of

house, owner or tenant, garden, degree of

urbanisation, percentage of highly

educated people, …) can be used to refine

segments even further. This data can

come from the telco companies as well as

from open data sources or third-party

data companies.9 Data is collected in

compliance with privacy regulations such

as the GDPR in the EU and the Privacy Act

in the US.

One of the most used attributes in the

early stage of addressable advertising is

the consumer’s address: UK telco operator

Sky, one of the forerunners of addressable

9 E.g. Experian, Bisnode, …

HOW DOES IT WORK?

FIGURE 2: 3 STEPS OF ADDRESSABLE ADVERTISING

10

advertising in Europe, claims in their

‘AdSmart’ report of 2019 that 1/3 of all

their addressable campaigns use geo-

targeting as one of the attributes.10 The

same percentage holds true for Belgian

broadcaster SBS.11

In addition, advertisers can use their own

data to enrich their target audience. This

way, they can target, or avoid targeting,

their own customers; specifically target

customers that haven’t been in contact for

the last 5 years; or, for example, reach

specific groups such as potential movers.

2. After defining the audience of

choice, the network distributor delivers

the addressable spot (which can be

tailored to the specific segment) to the set

top boxes of the defined audience through

cable, satellite or IPTV, after which the

spot is inserted in a certain slot. It is thus

perfectly possible that your neighbour

sees a different ad than you do while you

are watching the same show. Contrary to

linear TV, the ad will only be shown when

the audience is watching, and pricing is

based on actual views instead of

estimated exposure. The advertiser will

only be charged when a certain

percentage of his ad has been watched.12

With regard to how addressable ads are

distributed, different techniques exist.

Vendors of addressable advertising

technology typically offer different

addressable ad ‘delivery modes’ that the

distributor can choose to use. The

Aggregation technique comes closest to

programmatic advertising. In this non-

schedule-based delivery mode, multiple

channels are combined in order to offer

the largest possible inventory and

10 Sky (2019) 11 Coeymans (2020) 12 E.g. SBS Belgium uses 50% as the cut-off

point, in accordance with common practice for linear TV, whereas Sky UK uses 75% as the cut-off point.

audience. Addressable ads can then be

delivered to the relevant audience at any

time and in any of the shows that are part

of the inventory. Other techniques include

Dynamic Zoning, where advertisers can

divide the marketplace geographically,

and Multiple or Single Advertiser Spot

Optimisation, a schedule-based delivery

mode, by which addressable ads (either

from multiple advertisers or from one

advertiser) are delivered at the same time

as a default ad that is scheduled through

the traffic and billing system.13

3. The last step of addressable

advertising is to get detailed campaign

metrics and measurable ROI. On top of

precise numbers on reach and effective

CPM, addressable advertising vendors

offer solutions that allow closed loop

reporting, leveraging test vs. control

methodology.14 These solutions either

directly link CRM data provided by the

advertiser to ad exposure data from the

distributor, or, if no CRM data is available,

they work with transaction data from

third-party measurement providers15 or

use geo-location data from partners16.

Other data sources, such as web traffic on

the advertiser’s website, could be linked

as well to provide a full picture. This way,

addressable advertising can show you not

only who was exposed to your brand’s

message, but also who took action, be it

online or offline, as a result of it.

Moreover, these measurement capabilities

allow you to A/B test and gain invaluable

insights into the impact of your ads.

13 Invidi 14 For example: https://www.cadent.tv/

data-analytics/ 15 E.g. Autometrics, Polk Automotive, … for

car brands. 16 Acxiom (2018)

11

The TV advertising landscape has barely

changed over the last 70 years.

Advertising agencies buy ad inventory

upfront on behalf of their clients, without

exactly knowing who will watch their ads.

Typically, agencies buy ads in specific

shows or on channels whose audience

they think will have a good fit with the

target audience of their client. Anyone

reached beyond their target audience is

ad waste. Pricing in this traditional

practice is based on estimated exposure.

Estimated exposure in its turn is

influenced by audience size and the timing

of the slots: prices are higher during TV

peak season17, you pay more for popular

shows, prime time is more expensive than

shows outside peak hours, and live sports

events will cost more due to their large

audience and low likelihood of zapping18

or zipping19.

To this day, TV is still a highly valued

advertising medium and is regarded as

the best medium for reach and impact.

Advertisers tend to agree that no other

medium has the same level of attention

and engagement, and academic research

confirms that TV is the most effective

channel in terms of upper-funnel

metrics.20 In a case study for a leading

international social network, Pfeiffer and

Zinnbauer (2010) found that the same

budget in TV brought in 42% more

17 Coppens (2005): In Belgium, peak season is typically from March till May and from September till December

18 Zapping = the behaviour of changing channels when the ad break begins

19 Zipping = the behaviour of fast forwarding through ad breaks in recorded shows or

during time shifted viewing 20 Pfeiffer and Zinnbauer (2010); Briggs,

Krishnan, and Borin (2005)

registrations, flagged as an upper-funnel

metric in the study, than search engine

marketing. In a case study on car

manufacturer Ford, Briggs, Krishnan and

Borin (2005) reported that TV

outperformed other channels for ad recall

and brand image. Contrary to popular

belief, TV viewership has still been

growing in recent years, with 1.67 billion

households worldwide in 2018 compared

to 1.64 billion in 2017.21 Despite frequent

claims that digital is taking away time

from traditional channels such as TV, the

contrary is true as most traditional

channels remain more or less stable in

reach and consumption time.22

Nowadays, TV advertising space is mainly

bought by big blue-chip companies, who

are looking for the unparalleled reach and

impact of TV to increase awareness about

their brand or product. Unlike what is

happening in the print industry, for

example23, TV ad spending remains more

or less stable. However, the broader

advertising landscape is changing at a

very fast pace, driven by a strong increase

in digital ad spending. Digital advertising

surpassed TV advertising in global ad

spending in 201624 (see Figure 3), while

reports25 predict TV advertising to decline

further in the years to come. 5 years ago,

such decline was not yet forecasted26:

only in 2016 did forecasts start to re-

21 Watson A. (2019) 22 Global Web Index (2019) 23 Guttmann A. (2019): advertising spend in

magazine ads is predicted to drop from 26,8 bio US dollars in 2018 to 21 bio US dollars in 2021

24 Loesche D. (2017) 25 eMarketer Editors (2019); Lafayette J.

(2019) 26 Statista Research Department (2016)

THE CURRENT TV ADVERTISING

LANDSCAPE

12

evaluate the predicted growth in TV ad

spending because of the sharp rise of

digital ad spending.27

The TV advertising sector will have to

reinvent itself in order to stay competitive

in the broader advertising landscape. TV

has benefits that no other advertising

medium has, but the TV advertising

technology will have to answer the needs

of its different stakeholders if it wants to

keep its position as one of the most

important advertising media.

One of the biggest challenges for TV is the

changing consumer behaviour over the

last few years. The audience is

27 Feldman D. (2018)

increasingly shifting away from television

as its main source for content

consumption. Although the total reach of

TV in terms of households is not dropping,

people are dividing their time as content

can now be consumed through many

different channels and on many different

devices. Getting content on demand is

becoming the new normal – on TV with

various on-demand initiatives for watching

movies, TV shows and sports events, and

via many other channels.

FIGURE 3: GLOBAL DIGITAL AD SPENDING SURPASSED TV AD SPENDING IN 2016 24

13

This makes advertising on channels other

than TV more attractive to marketers.

Moreover, phenomena like cord-cutting28

and binge watching29 have significantly

increased in popularity during the last few

years. On top of that, advertising

avoidance behaviour has been increasing

as well. Where digital advertising is

afflicted by ad-blockers30, TV has a very

similar problem with the phenomenon of

time-shifted viewing and zipping. Although

Wilbur claims that zipping might not be all

negative31, it certainly poses a challenge

to reaching your audience on TV. A study

on ad blocking by Joris et al. suggests that

there are opportunities for media

companies to discourage ad blocking by

attaching consequences to the use of ad

blockers such as loss of free access to

content. Similar creative solutions might

be possible for zipping behaviour.32

28 Cord cutting = the practice of cancelling or forgoing a pay television subscription or landline phone connection in favour of an alternative Internet-based or wireless

service. (lexico.com) 29 Binge watching = the practice of watching

multiple episodes of a television programme in rapid succession, typically by means of DVDs or digital streaming. (lexico.com) Google Trends shows a peak for the topic “binge-watching” in January 2019.

30 Shiller, Waldfogel, and Ryan (2017)

concluded that “ad blocking poses a substantial threat to the ad-supported web”

31 Wilbur, K. C. (2008)

From a marketer’s perspective, direct

accountability and precise ROI insights

have become invaluable. Digital channels

tap into this need and offer extensive off-

the-shelf analytics and campaign

measurement options, allowing marketers

to report back to their superiors with clear

figures on the ROI of their campaign. TV,

however, is still unable to deliver clear

insights on campaigns. TV campaign

measurement is typically limited to

audience measurement by a Joint Industry

Committee (JIC)33, which collects panel

data on TV viewing. Broadcasters

sometimes organise impact surveys, but

the vast majority of those are meant to

look at the overall effectiveness of TV

campaigns and they are rarely

commissioned by one specific advertiser.

From the advertiser’s side, digital

advertising has a much lower threshold

than TV advertising, thus also attracting

smaller advertisers that could never afford

linear TV campaigns. Although the higher

threshold adds to the trustworthiness and

the image of brands that are present on

TV, it also means that TV is still very

much reserved for the lucky few and has a

smaller base of potential customers than

digital advertising. Addressable

advertising has the potential to provide an

answer to almost all of the above needs.

32 Joris, G., Poels, K., Mechant, P., Pabian, S., & De Marez, L. (2018)

33 Nielsen: Joint Industry Committee = Form of survey organisation in which a joint

industry grouping of TV station, advertiser

and media buyer representatives holds a contract with one or more data suppliers for a fixed time period. The functions of the JIC generally include contract specification, supervision of the TAM service, ownership of data copyright and determination of the conditions of data release. Examples: BARB

(UK), CIM (Belgium), Médiamétrie (France), GfK (among others in Germany), …

“ People are dividing their

time as content can now be consumed through many different channels and on many different devices.

14

The TV advertising ecosystem is a clear

example of a business ecosystem. In

academic literature, Moore has described

a business ecosystem as “a network of

organisations and individuals that co-

evolve their capabilities and roles and

align their investments so as to create

additional value and/or improve

efficiency”.34 Simply put, the concept of an

ecosystem is to create a network of

partners that helps make your business

more successful, and thus increases the

total value created. That value should

then be distributed among the different

stakeholders, so that everyone is

motivated to ‘grow the pie as a whole’.

34 Moore, J.H. (1993)

The TV advertising ecosystem is a rather

complex ecosystem with multiple

stakeholders. Figure 4 shows a simplified

version with the most prominent parties

involved. The brand or the advertiser on

one side wants to get his message across

to the consumer or the audience on the

other side. In between, multiple entities

play a role in how ads are delivered from

the advertiser to the consumer. Inherent

to the concept of an ecosystem, each

stakeholder shares in the value in one way

or another. This is illustrated in Figure 4

by the streams of goods and services,

money and credits, and information.

THE TV ADVERTISING ECOSYSTEM

FIGURE 4: CURRENT TV ADVERTISING ECOSYSTEM

15

The roles in the ecosystem are pretty

similar across most countries. Advertisers

either go through media agencies or, in

some cases, have a direct contact with

broadcasters. Media agencies offer media

campaign planning services, including

reservation of ad inventory, to advertisers

in exchange for a fee. In linear TV

advertising, the role of the media agency

is crucial as it is typically the one buying

ad inventory, collecting audience

measurement data from the JIC, and

aggregating all insights afterwards.

The broadcaster’s main role is to provide a

varied range of programmes for different

groups in society. TV content is typically

delivered by content providers in

exchange for payment. Within those

programmes, they provide ad slots that

advertisers can buy according to their

target audience. The broadcaster (or the

ad sales house35) is the point of contact

for advertisers and/or media agencies.

They sell the ads to the advertisers or

media agencies and negotiate ad

inventory deals. Advertisers, through their

agencies, pay the broadcaster a cost per

GRP (CGRP). The GRP (gross rating point)

quantifies estimated impressions as a

percentage of the target population and is

based on panel-based audience

measurement.

The distributor, which is often a telecom

provider, provides the platform.

Distributors have a carriage deal with the

broadcasters that use their platform to

distribute TV content. The distributor also

collects viewing data and communicates

insights on market share to the

broadcaster, as this is typically the basis

for the carriage deal. The end-consumer

normally has direct contact only with the

distributor: the distributor charges the

consumer a monthly fee for their TV

35 In some cases, ad sales houses are the point of contact for advertisers and/or media agencies. Broadcasters then use ad

subscription, which is often combined with

other connectivity services such as

internet, telephone or mobile. Typically,

the distributor also provides the hardware

that the end-consumer needs to watch

television. Moreover, the distributor is

often also one of the biggest advertisers.

Especially on TV, telco companies are

consistently in the top 5 of the biggest ad

spenders.36 Thus, they will benefit from

innovative advertising models from 2

different angles.

Since online advertising is the strongest

competitor of TV advertising, online

advertising channels are added to Figure 4

as part of the ecosystem. As in TV

advertising, advertisers can either be in

direct contact with digital ad brokers,

Google, Facebook, or other digital ad

vendors, or they can commission media

agencies to plan and carry out their online

advertising campaigns on their behalf. In

digital advertising, detailed campaign

metrics are often available in a self-

service platform that can be accessed by

the advertiser and/or the media agency.

sales houses to sell their ad inventory in exchange for a commission fee.

36 Gutmann, A. (2019)

16

The ecosystem might be even more

important for addressable advertising

than for linear TV. In an attempt to

combat the dominance of the digital

giants, the different stakeholders will

have to join forces to grow the

addressable advertising market as a

whole. Standardisation in audience

segments, data access, and how

addressable ads are traded – as well

as scale in reach and inventory37 – are

needed to assure that advertisers

know what they are getting when they

buy addressable ads. Numerous

executives in addressable advertising

say that cooperation with all parties in

the ecosystem is indispensable if

addressable advertising is to

succeed.38

37 Peterson T. (2019): A lack of addressable inventory is one of the reasons that many

advertisers in the US say they don’t use the technology. However, in countries with a limited number of competitors in the

ecosystem, like Belgium, addressable initiatives are able to reach nearly 100% of

all ad blocks. (SBS Belgium) 38 Pidgeon B. & Moulding J. (2019)

THE IMPACT OF ADDRESSABILITY

ON THE TV ECOSYSTEM

17

The new technology of addressable

advertising has some implications for the

different roles within the ecosystem. For

starters, the broadcaster will be

responsible for planning and carrying out

the campaign in addressable advertising,

whereas, in linear TV advertising, this is

usually the sole responsibility of the media

agency. The role of the media agency will

thus become less paramount as campaign

planning becomes more straightforward.

Media agencies will likely take up a more

administrative and facilitating role in

addressable campaigns. However, there

might still be added value in media

agencies. As an executive puts it: “They

39 Moulding J. (2020)

are the guardians of effectiveness for

client campaigns across the whole

communications ecosystem. Agencies can

look at the holistic picture, working out

how best to use the different media and

media owners together.”39 The media

agencies that are quick to adapt could still

play a supporting role for advertisers by

offering specialist advice in addressable

advertising campaigns. Especially in the

first years of the new technology, many

advertisers risk getting lost in the

numerous possibilities. A media agency

could help decide on the exact target

audience, determine what exactly should

be measured, and make sure it becomes

FIGURE 5: ADDRESSABLE TV ADVERTISING ECOSYSTEM

18

one consistent product for their clients,

even though every vendor does

addressable advertising slightly

differently. Specialised media agencies

could help determine for which campaigns

addressable advertising makes most

sense, and for which it makes most sense

from a cost perspective to stick with linear

TV advertising. Moreover, they could play

a role in processing and enriching the

campaign measurement data, as much

more data will be available. Smaller

marketing teams might be better off

delegating some tasks to media agencies,

as many of them already do today for

planning digital advertising campaigns.

Similar to digital advertising, however, in

the near future advertisers will most likely

be able to plan their campaigns

themselves through self-service platforms,

if they wish to do so, bypassing media

agencies all together.

In terms of pricing, broadcasters will

charge the advertiser or media agency a

fixed price per 1000 impressions (CPM). In

contrast to the CGRP in linear advertising,

CPM will not be based on estimated

exposure, but on actual exposure. Thus,

the currency is completely different from

that of traditional TV advertising.

To prevent making pricing an issue,

executives in addressable advertising plea

for using the same CPM for every target

segment, rather than charging more as

segments become more granular.40 In the

starting phase of addressable advertising,

this makes sense from a transparency

perspective. However, in the long run this

might not be a sustainable model. Asking

for the same CPM for each campaign,

regardless of the granularity, will likely

result in over-targeting of certain ‘high

value’ groups, such as people with a

certain income. Hence, addressable

40 Pidgeon B. & Moulding J. (2019) 41 Malthouse E. et al (2018) ; Guitart et al

(2019)

advertising might ultimately evolve

towards actual programmatic advertising,

characterised by auctioning systems

similar to the placement process of online

advertising.41 These might be less

transparent, but they can guarantee an

even distribution of addressable ads

among all households. Some are even

looking into the possibility of

programmatic creatives, where AI

algorithms decide in real-time which

creative should be shown to which

household.42

The distributor still provides the platform

and usually works together with a third-

party software provider that offers the

addressable technology. Usually, the

distributor charges the broadcaster a fixed

price per 1000 impressions, a certain

percentage of which they give up to the

software provider as a license fee. For

custom audiences or closed-loop reports,

they often charge a fixed price. Moreover,

their role also entails control over the

data. Both their own data and open or

third-party data from data & analytics

companies can be used for developing

profiles. The data usually stay with one

trusted entity, in this case the distributor.

The broadcaster has access only to the

developed profiles (e.g. young family, pet-

owner, sports lover, …) in order to

propose these to the advertiser but has no

access to the underlying data. The

distributor also collects viewing data and

translates this to reports about

impressions and reach to share with the

broadcaster, who in its turn shares (some

of) these insights with the advertiser.

42 Chen G. et al (2019)

19

DATA AND

MEASUREMENT

The use of data is one of the biggest

opportunities – yet, at the same time, one

of the biggest challenges – related to

addressable advertising on TV. Technology

has been evolving at an incredible pace,

and we are now able to collect and

process data in huge volumes and

countless formats. This offers

opportunities both for targeting and for

measurement. Tech giants such as

Facebook and Google lead the way in how

data can be used for these purposes, and

media companies should learn from their

pioneering work in order to offer their

customers an innovative, data-driven

advertising experience.

In terms of targeting, many media

companies have been developing profiling

attributes similar to those offered by

Google and Facebook. As described

earlier, distributors use their own data,

open data and third-party data for this. In

order to truly optimise their predictive

models and targeting capabilities, they

should aim to integrate more data

sources, such as internet browsing data,

or purchase data for consumers who are

willing to disclose this data in return for a

better customer experience or even for

other benefits. This return on data will

become an important question for

companies to resolve. One benefit could

be a more personalised experience, but

one could also imagine monetary benefits

or a reduced ad load.

The fact that digital advertising comes

with advanced measurement and

reporting capabilities and TV does not, is

another important reason that marketers

are shifting advertising budgets away

from TV. Companies like Facebook and

Google have put a lot of focus on

providing marketers with metrics and ROI,

thus responding to the need of marketers

to report back to their superiors with facts

and figures. TV, on the other hand, has

relied on panel-based audience

measurement for decades. The metrics

offered by these audience measurement

providers are not nearly as granular and

rich as those offered by digital advertising

vendors. Moreover, audience

measurement providers are limited in

their ability to take into account the

impact of addressable advertising. The

various parties in the ecosystem will have

to share their data in a transparent way to

resolve these issues.

Especially when TV advertising starts to

be used for lower funnel campaigns – thus

competing directly with digital advertising

channels – the need for good

measurement capabilities will increase

dramatically. Awareness is measured with

metrics such as impressions, reach and

reach-on-target, which are covered

perfectly by traditional TV. For the

consideration and conversion phase,

however, more detailed metrics – like

click-through rate, bounce rate, time on

content, downloads, and purchases – are

needed. Improved set top box technology

makes it possible to collect and share data

on household TV ad exposure; but, in

order to gather the metrics mentioned

above, systems should be put in place to

close the advertising loop by adding

website traffic and purchase data from

advertisers. As screens are becoming

smarter, one could even imagine

immediate interaction with the TV screen

(for example, “send me this offer via e-

mail”) in the future. For addressable

advertising to truly become a force to be

reckoned with, it is paramount that

measurement capabilities improve and

become at least as good as they are in

digital advertising.

A problem related to this is the fact that

set top boxes can only target and

measure on a household level, whereas

digital advertising is done on an individual

level. In addressable TV, there is currently

no way to distinguish who is watching an

THE CHALLENGES

20

ad. More focus should be given to

solutions that can detect which family

member is watching at which time, both in

order to target the right person and to

collect data on individual ad exposure.

PRIVACY AND ETHICS

Closely linked to the need for consumer

data is the challenging topic of privacy

and ethics. In a fast-changing world,

consumers have become increasingly

aware of their data and privacy. In a 2019

study, 78% of consumers worldwide

claimed to be concerned about their online

privacy, 53% of whom were more

concerned than a year before.43 In digital

advertising, in particular, there have been

numerous stories about data leaks and

misuse of data, causing consumers to be

sceptical about the privacy standards in

online advertising. Two concepts merit our

attention: consumer privacy on the one

hand, and data ethics on the other.

Consumer privacy is related to collecting,

using and storing personal data in a

responsible and legally correct manner, in

line with your customers’ expectations,

regulations and laws.44 In addressable

advertising, data is gathered both for

targeting the right consumers and for

measuring whether the right audience saw

your ad and took action as a result of it.

By default, this makes addressable

advertising a sensitive topic in terms of

privacy. Distributors have the

responsibility to not only protect their

consumers’ data, but also to educate

people about the use of their data and

43 CIGI-Ipsos (2019); Clement J. (2019)

how disclosing their data can harm or

benefit them.

In terms of data protection, there are

several measures in place. First of all, the

data is generally kept and managed by

one trusted party. In Europe, the

distributor, who usually already has a

trusted relationship with the consumer, is

typically the only entity with access to all

of the customer data. They take all of the

necessary measures to comply with

regulations, and many try to go beyond

these requirements to preserve their good

relationship with the consumer. Moreover,

consumers always have the opportunity to

withdraw their consent for receiving

addressable advertising. In that case, they

only receive linear advertising. This

doesn’t mean they will receive less or no

advertising: consumers will still receive

broad, untargeted ads. In the US, it’s

more common that a reputable data

company in the middle manages the data,

similar to what happens with data used for

direct mailing. The broadcaster, advertiser

and technology vendor don’t have access

to the raw data. The data that is shared

with them is either aggregated or

encrypted and hashed along the way.

In Europe, the GDPR increased the legal

requirements for data collection and

processing as of May 2018. All personally

identifiable data can legally be collected

only with the consumer’s consent. The US

works with an opt-out mechanism instead

of an opt-in mechanism such as Europe’s.

Companies should take caution, especially

when it comes to collecting and processing

sensitive types of data. For example, it

would undoubtedly be very interesting to

capture consumers’ surfing behaviour in

order to link certain online actions to ad

exposure. This would enrich the

measurement options of addressable

advertising substantially and would allow

44 Lawler (2019)

21

reporting of the same detailed metrics

that digital advertising already offers.

However, because of the intrusive

character of these data, they should only

be gathered from people who have

explicitly allowed this. In order to put

automated measurement options in place,

companies will have to invest in informing

consumers and establishing a win-win

situation where consumers get enough

value in return for their data.

Privacy and the issue of willingness to

share data has received a lot of attention

in academic literature in the last few

years. As discovered by academic

research, transparency45 and

personalisation46 can positively influence

consumers’ willingness to share data.

However, Awad and Krishnan47 have also

discovered what they call the

personalisation-privacy paradox, which

states that people who value privacy

features most have a low willingness to be

profiled for personalisation purposes.

Thus, consumer willingness to share data

for personalisation purposes or otherwise

is very dependent on their own values and

attitudes. Nevertheless, consumers’

privacy sensitivity might also be

overstated by consumers. Norberg

describes this as the ‘privacy paradox’:

the discrepancy between individuals’

intentions to disclose personal information

and their actual personal information

disclosure behaviours.48

The concept of data ethics, on the other

hand, is related to doing the right thing

with data, considering the human impact

from all angles, and making decisions

based on your brand values.49 Gartner

45 Xu H. et al (2009); Zimmer et al (2010) 46 Thirumalai S. and Sinha K.K. (2013);

Benlian A. (2015); Karwatzki et al (2017) 47 Awad N.F. and Krishnan M.S (2006);

Karwatzki et al (2017); Aguirre et al (2015)

defined digital ethics as one of the main

challenges for 2019.

The shift from privacy to ethics moves the

conversation from ‘are we compliant?’

toward ‘are we doing the right thing?’. In

its report, Gartner describes this shift as

the hierarchy of intent (see Figure 6).50

Companies can either do the strict

minimum to be compliant, or they can go

beyond regulations and define their data

strategy in accordance with their own

brand values.

From an ethical point of view, companies

need to think carefully about the data

strategy that they want to follow. As

Gartner fittingly articulates it: “Following

your values comes down to being able to

look yourself in the mirror and feel

convinced you are doing the right thing.

Are you treating customers, employees, or

citizens as you would expect to be

treated? The successful use of technology

is not to maximise its utility for the

48 Norberg (2007) 49 Lawler (2019) 50 Gartner (2018)

FIGURE 6: HIERARCHY OF INTENT 50

22

organisation at the expense of the

customer, rather it is to figure out how to

get the most value out of it for both the

organisation and the individuals it

depends on.”51

Instead of trying to gather as much

consumer data as possible, companies

should make distinct choices about what

data they want to collect and use, why

and how they do this, and how they

communicate about it to their customers,

all in line with their brand’s mission and

values. Companies have the opportunity

to take up the role of ‘data heroes’,

promising their customers that they

adhere to strict principles concerning the

collection and use of their personal data,

going beyond legal obligations.

Academics have been discussing ethical

behaviour in data collection since the

phenomenon of big data emerged over 10

years ago. In the procedural justice

literature, Wirtz and Lwin found that “fair

information policies effectively alleviate

consumer privacy concerns and provide

maximum benefit to companies.

Consumer perceptions that a firm’s

privacy practices are fair promote trust

and enhance willingness to provide

information, while simultaneously

reducing negative behaviours, including

falsifying information and negative word-

of-mouth”.52 However, complex privacy

policies that are more difficult for

consumers to understand are viewed as

being less fair and, accordingly, diminish

confidence and trust in the firm.53 Some of

the literature has hinted at privacy as a

company strategy, but research on this

matter remains underdeveloped.54 In a

study that dates back to 1999, Culnan and

Armstrong already found that consumers

are more willing to grant marketers

51 Gartner (2018) 52 Wirtz and Lwin (2009); Martin and Murphy

(2017) 53 Vail et al (2008)

permission to use their information when

the company’s procedures for information

use are fair. In return, they argue that

these firms will obtain greater access to

rich user data, giving them a competitive

advantage over peers with consumer

information procedures that are perceived

as less fair.55

INERTIA

As is always the case with new

technologies, inertia is one of the biggest

challenges to overcome. People like to

stick to what they know and are used to.

TV advertising has barely changed since

the first TV ad aired in 1941, so the

enormous evolution that addressable

advertising is, becomes even bigger in the

context of this industry. Moreover, the

technology is not as mature in all

countries, making it hard for big

international players to convince

international headquarters to start using it

in certain local markets. It will come down

to some forerunners that start

experimenting with addressable

advertising, in order to provide success

stories and cases that can convince other

companies.

54 Martin and Murphy (2017) 55 Culnan and Armstrong (1999);

Martin and Murphy (2017)

23

COST

On the advertiser’s side, the most difficult

hurdle to overcome is the perception

about the cost. Addressable advertising

involves a higher investment per

individual ad view, which leads to the

perception that addressable campaigns

are more expensive than linear

campaigns. Nonetheless, providers of

addressable campaigns state that the

effective cost per mille (eCPM) is lower –

and ROI is higher – than that of linear

campaigns because ad waste is so much

lower. An example by technology provider

Invidi is illustrated by Figure 7 and Figure

8.56

As the scale of addressable advertising

increases, price will most likely decrease.

At this stage, campaigns with a broad

56 Invidi (2020)

target group still gain most from linear TV

advertising. However, when the price

comes down, it would make sense in the

end to deliver all campaigns with

addressable technology via the set top

box.

SCALE AND

STANDARDISATION

Linked to that is the challenge of scale.

Scale comes down to two things: a large

number of households that can be reached

on the one hand, and the amount of

addressable inventory, or shows and

channels in which linear ads can be

FIGURE 7: ECPM VS CPM (PURINA CASE) 56

24

replaced by addressable ads on the other

hand. As long as there is limited inventory

or reach, it will be hard to convince

companies to work with addressable

advertising.57 However, in countries with a

limited number of competitors in the

ecosystem, like Belgium, addressable

initiatives are already able to reach nearly

100% of all ad blocks.58

An additional challenge is the fact that

addressable advertising should ideally be

a multi-platform initiative. In most cases

today, it is implemented via set top box

only, although some distributors offer

addressable advertising on other

platforms as well. In the future, however,

it should be implemented on all devices,

apps or websites through which people

can watch video content. People consume

57 Peterson T. (2019) 58 SBS (2019)

content through many different channels

and, in order to truly deliver on its

promise to reach the audience whenever

and wherever they’re watching,

addressable ads should be possible on all

customer touchpoints.

Furthermore, industry experts assert that

standardisation is needed to grow the use

of addressable advertising. Everyone does

addressable slightly differently today. To

compete with large players such as

Facebook and Google – where it is easy to

compare audience segments, pricing, and

so on – addressable advertising will need

to be as clear and standardised as

possible for advertisers, not only between

local players but first and foremost

between international players.59

59 Pidgeon B. & Moulding J. (2019); Coeymans J. (2020)

FIGURE 8: ECPM VS CPM IN NUMBERS (PURINA CASE) 56

25

There is much to say for TV advertising,

as well as for digital advertising. Both

channels have their advantages and their

disadvantages. Addressable advertising is

a way of combining the best of both

worlds. It brings together the unparalleled

scale of attention and emotional

engagement of linear TV with precise

targeting and advanced campaign

measurement.

TV advertising is still considered to be the

most effective – both in conveying the

message and in reach. 60 Therefore, it is

still the medium of choice for upper funnel

campaigns. As Les Binet and Peter Field,

gurus in advertising effectiveness,

famously decided: the most effective

advertising campaigns spend 60% of their

budget on brand advertising, and 40% on

activation. 61 For the 60%, no other

medium is more effective than TV. First

and foremost, TV has undeniably the

largest reach of any advertising medium.

Moreover, it reaches people from all ages

and all backgrounds. Although there is a

clear age gap in daily TV consumption,

with younger people spending far less

time on TV than the older generations, TV

still remains the most effective medium

for reaching a broad audience in a short

time. 62

Secondly, TV allows a lot of freedom in

how brands convey their message. By

using 30-second videos, brands can tell

their story better than in a static ad or a

shorter video. The TV ad format has the

60 Young K. (2017); Heath R. (2009) 61 Binet L. & Field P. (2009); Pidgeon B.

& Moulding J. (2019) 62 Nielsen (2019); Richter F. (2019);

Global Web Index (2019) 63 Think TV (2017); Binet L. & Field P. (2012)

ability to evoke an emotional response,

and emotional triggers drive sales and

long-term profits. 63

Thirdly, TV messages are picked up better

by the audience than any digital ad.

People watch TV in their leisure time,

which makes them more open to stimuli

than they are in a work environment or

while commuting, for example. On top of

that, TV is characterised by low noise.

Whereas, on digital channels, people are

being flooded with advertisements and

content, on TV you see only one ad at a

time without any other immediate

distractions on the screen. In an

Australian study, academic professor

Karen Nelson-Field found that 58% of TV

viewers are actively watching, whereas

this is only 31% for YouTube and only 4%

for videos on Facebook. Moreover, she

found that screen coverage is strongly

correlated to attention and sales.64 The

phenomenon of second-screening or

multi-screening, in which people use

multiple screens at the same time to

consume media, does affect the scale of

attention on TV65, but it also provides

opportunities for marketers, as TV ads can

trigger an immediate online response.66

Another advantage of television that is

often brought up by industry experts is

brand safety.67 The context in which an ad

is shown can evoke associations in the

minds of the viewers. Whereas in digital

advertising it is extremely hard to control

the environment in which your ad is

64 Think TV (2017) 65 Van Cauwenberge, A. et al (2014);

Segijn C. (2016); Young K. (2017) 66 Du R. et al (2019); Liaukonyte J. et al

(2015); Joo M. et al (2016) 67 Tallariti C. (2020); Think TV (2017)

ADDRESSABLE ADVERTISING:

THE BEST OF BOTH WORLDS

26

shown, TV advertising holds fewer such

risks.

And finally, being on TV has always

conferred a sense of prestige and

trustworthiness.68 Although ‘as seen on

TV’ is no longer as strong a statement as

it used to be, simply being on television

still endorses the company and gives a

boost to the brand image.

Despite these strengths, there are also

some unanswered needs in TV

advertising. First of all, TV is still regarded

as an upper funnel medium, ideal for

brand building and creating awareness.

When marketers want to launch activation

campaigns, however, TV is rarely the

medium they choose, due to the very

limited targeting options.

Furthermore, TV is lagging behind on

measurement and reporting capabilities.

In the past, marketers simply trusted the

power of TV advertising and knew by

experience that it worked. As mentioned

above, the story changes when TV is used

for lower funnel campaigns. The advanced

measurement and reporting capabilities of

digital media have raised the bar. With

open rates, bounce rates, click-through

rates, cost-per-click, and many more

metrics, marketers are getting used to

detailed campaign reporting and

reportable insights on ROI. TV still relies

on the same limited techniques that have

been used for decades, which no longer

fulfil the needs of the new, much more

data-driven generation of marketers.

Digital advertising answers many of those

needs, thus diverting advertisers from TV

to digital advertising.

Addressable advertising could be the

missing link, bringing the advantages of

linear TV and digital advertising together.

It has all of the aforementioned benefits

68 Herhold (2017) 69 Deng, Y. and C. F. Mela (2018)

that TV has, but offers opportunities to

also implement some of the unique selling

points that digital advertising has.

Firstly, addressable advertising will make

it easier to use TV advertising for

campaigns further down the sales funnel.

Addressable advertising allows you to

target specific audiences, which is

indispensable for campaigns aimed at

boosting consideration and conversion.

With good target segments, addressable

advertising can avoid ad waste almost

completely.

Academic literature suggests that

addressable advertising could decrease

per exposure cost and raise incremental

profits. In a cost-based, advance-buy

scenario, Deng and Mela (2018) estimate

that addressable advertising could reduce

costs by up to 92% for the same target

views.69 Case studies from Sky, one of the

forerunners of addressable advertising,

show that these targeting capabilities can

increase ad engagement by no less than

35%, spontaneous recall by 10%,

emotional response by 13%, and word-of-

mouth by 14%.70

70 Sky (2019)

27

Just as important, however, is the fact

that the technological evolution in TV,

which led to addressable advertising,

offers the opportunity to get up to par

with digital advertising in terms of

measurement capabilities. From a

technological point of view, the improved

set top boxes make it possible to gather

data on ad exposure. If addressable

advertising vendors find ways to

structurally link this exposure data to data

on conversion – such as purchase data or

web traffic data from advertisers –

addressable advertising could answer this

need as well.

Last but not least, addressable advertising

also has the advantage that smaller

campaigns can be run and smaller

companies now also get the chance to

play in the big league of TV, where before

they had to stick with regional advertising

or digital advertising. Both Sky from the

UK and SBS Belgium claim that more than

50% of their addressable advertising

customers are new-to-TV brands.71

In the end, addressable advertising

combines the benefits of the big screen

with precise targeting options and

advanced data capabilities.

However, the initial belief that addressable

advertising would replace linear TV

advertising completely is no longer shared

by many executives.72 A lot of people in

the industry believe that the power lies in

the combination of both. Where broad,

linear advertising is still expected to be

important for brand building, addressable

advertising is the perfect solution for

campaigns with lower funnel goals or for

local companies looking to build their

brand on TV. Although they did not focus

on lower funnel metrics, Sky found in its

aforementioned report that, coupled with

71 Sky (2019); SBS (2019) 72 Pidgeon B. & Moulding J. (2019);

Coeymans J. (2020)

linear TV advertising, addressable ads

could boost awareness by 25%. While

pure addressable advertising only

increases ad recall by 10% compared to

pure linear advertising, ad recall is

boosted by no less than 49% when

addressable ads make up at least half of

the ads shown to someone, with the rest

being classic linear TV ads.

Nonetheless, this is not really an issue of

ad technology, but rather of reach. It goes

without saying that the combination of

both brand-building and activation-

focused campaigns will be the most

beneficial for driving long-term profits, as

stipulated by Les Binet and Peter Field73.

Thus, both broadly targeted and narrowly

targeted campaigns will be necessary. The

cost of addressable advertising is the main

reason that it still makes most sense to

use linear advertising for broadly targeted

campaigns today. Besides that, the TV

business model is a very old one and

changing it will require some time and

patience. Once the cost of addressable

advertising can be brought down and we

see a shift in the mindset of the

stakeholders, one could imagine a

scenario whereby ads are traded through

an auctioning system comparable to

Google’s, and all ads in the end would

become addressable. But for now at least,

addressable advertising in combination

with linear advertising appears to be a

stronger weapon than addressable alone.

73 Binet L. & Field P. (2009)

28

THE CONSUMER

For the consumer, the main benefit is of

course the increased relevance of the

advertisements shown. If you do not have

a pet, there is no point in seeing ads for

dog food. Getting a more personalized,

relevant ad offering increases the overall

experience of TV. Sky showed in its

AdSmart report of 201974 that there is

48% less channel switching during

addressable ads compared to standard

ads in the first three positions of a

commercial break. Enjoyment of TV

advertising is said to have raised by 10%

for viewers that were exposed to

addressable ads.

Opening up the floor to smaller players as

well, consumers might get more varied

ads of brands and products that have a

better fit with their own preferences and

tastes instead of always seeing the same

big blue-chip companies.

Moreover, the new technology could also

reduce the ad burden in the long run.

When relevance is increased and ad waste

is reduced, less ads will be needed to

reach the right audience. On online video

platforms75, where ads are targeted, we

see much shorter ad breaks than on TV.

This should result in an even better

customer experience with a bigger focus

on content, rather than on advertising.

74 Sky (2019)

THE ADVERTISER

For the advertiser, the benefits are

perhaps most obvious. First of all,

addressable advertising will allow

marketers to improve their marketing

story. The targeting capabilities will make

it possible for brands to reach very

specific audience segments, allowing them

to better connect with them by

personalizing ad creatives. Brands will be

able to adapt their message according to

different target groups, test responses to

ads and adjust future messages

accordingly.

Secondly, more relevant ads will improve

the customer experience and lower

zapping and zipping. Advertising fatigue is

one of the biggest issues in the current

advertising landscape as consumers are

constantly flooded with ads from every

possible angle. Consumers will be less

inclined to avoid ads when they are more

relevant to them and will likely be more

open to the advertisements shown. As

mentioned before, Sky claimed in its

report from 2019 that channel switching

could be cut by half by deploying

addressable advertising.

75 For example, on broadcaster websites such as vier.be or VTM Go (Belgium)

BENEFITS FOR STAKEHOLDERS

29

Thirdly, improved data capabilities will

allow marketers to measure their

campaign results and optimize ROI.

Today, marketers are tempted to choose

for digital advertising above TV

advertising because of its extensive

analytics and reporting possibilities.

Addressable advertising will give

marketers the ability to measure

attribution and sales lift. Clear insights on

performance and ROI will allow marketers

to make an informed choice about their

media mix, based on actual performance

of the different channels instead of their

respective reporting options.

And last but not least, TV advertising will

no longer be reserved purely for the blue-

chip companies. Sky’s director of

advanced advertising Graeme Hutcheson

claims that, while clients include a healthy

range of big blue-chip companies, over

70% of its customer base is new-to-TV.76

THE BROADCASTER

First of all, addressable advertising brings

new customers to TV. Sky states in its

2019 report that 75% of its addressable

advertisers are either new-to-TV or new-

to-Sky. Similarly, SBS Belgium claims that

more than 50% of their addressable

advertising customers are new-to-TV

brands. This is no wonder, since they

benefit the most from addressable

advertising: against all brands measured

in Sky’s report, new-to-TV brands can

expect a 20% higher boost in purchase

metrics. With a 70% return rate for

addressable advertising77, this provides a

very interesting new customer base.

76 Corvin A. (2019); Sky (2019) 77 Sky (2019)

Another advantage for the broadcaster is

the reduced channel switching. More

relevant ads will improve the TV

experience, causing less consumers to

change to competitors’ channels because

of advertising avoidance behaviour.

THE DISTRIBUTOR

The distributor shares in the benefits for

the broadcaster. A larger customer base

and increased revenues are as interesting

for the distributor as they are for the

broadcaster, since broadcasters pass on

part of their revenues to the distributor.

Deng and Mela (2018) calculate that

prices for addressable advertising could be

44%-68% higher than for linear

advertising.78 This incremental value is to

be divided between the broadcaster and

the distributor.

Moreover, advertising revenues are

paramount to ensure a high-quality

content offering. Knowing that 60% to

80% of content production stands or falls

with advertising revenue, distributors

need to invest heavily in guaranteeing

these revenues. By maintaining or

improving the quality of the content, the

pay TV product that distributors offer to

consumers will increase in value as well.

78 Deng, Y. and C. F. Mela (2018)

30

THE MEDIA AGENCY

The role of the media agency will probably

be the trickiest one in the addressable

scenario. As they will no longer be the

ones buying ad inventory, contrary to

what is the case for traditional TV

advertising, their role will change

drastically. However, there might be

benefits for them as well. Addressable

advertising will increase and improve the

available data for campaign measurement.

Instead of the limited data provided by

the JIC, companies now get a full data

view. By repositioning themselves and

focusing on these data capabilities, media

agencies could still be of great value in a

supporting and advising role, or act on

behalf of their customers as some media

agencies already do for digital advertising.

Their role can consist of campaign

planning but also of bundling, processing

and enriching the available data for

companies. With stronger data

capabilities, media agencies can improve

their current offering and better prove

their worth to their consumers.

“ By repositioning themselves and focusing on data capabilities, media agencies could still be of great value in a supporting and advising role.

31

Addressable advertising could benefit

nearly all stakeholders in the TV

advertising ecosystem. It combines the

strength of TV with the advantages of

digital advertising and thus offers

interesting opportunities for advertisers

and consumers. Broadcasters and

distributors can charge higher prices and

more targeted advertising can decrease

advertising avoidance behaviour.

Challenges that need to be overcome are

the perception about cost, inertia in the

industry and overall complexity of the new

initiatives. More research has to

investigate the incremental value that

addressable advertising can bring to the

table, in order to justify the higher CPM.

Although the effective CPM (eCPM) is

lower for addressable advertising than for

linear TV advertising, a shift in

advertisers’ mindset is needed to start

looking at eCPM instead of CPM. Inertia

needs to be fought both on the

advertisers’ side and the broadcasters’

side. Advertisers need to start

experimenting and building up experience

in addressable advertising to discover its

full potential. Distributors and

broadcasters need to invest in evolving

the technology further, opening up more

addressable inventory, and setting up

collaborations across the ecosystem. The

latter should also help to decrease

complexity by improving transparency and

creating a standardized approach to

addressable advertising, both in target

audiences, measurement options and the

way addressable ads are traded.

While there are still challenges,

addressable advertising is a very

promising technology. Unlike any other

technology, it will allow advertisers to

develop a full funnel media strategy with

the unique characteristics of TV.

CONCLUDING COMMENTS

32

Acxiom (2018). Linear TV campaigns deliver results with closed-loop measurement [Blog]. Retrieved 2020 from Acxiom: https://www.acxiom.com/blog/linear-tv-campaigns-deliver-results-closed-loop-measurement/

Adobe Media and Entertainment Team (2017). TV’s Big Bet on Audience Based Advertising [Blog]. Retrieved 2020 from Adobe: https://theblog.adobe.com/tvs-big-bet-audience-based-advertising/

Aguirre, Elizabeth M., Dominik Mahr, Dhruv Grewal, Ko de Ruyter, and Martin Wetzels (2015), “Unraveling the Personalization Paradox: The Effect of Information Collection and Trust-building Strategies on Online Advertisement Effectiveness,” Journal of Retailing, 91, 1, 34–49.

Anasia D’mello (2020). Addressable advertising boom across all regions and platforms forecast by Rethink TV [Article]. Retrieved 2020 from VanillaPlus: https://www.vanillaplus.com/2020/01/02/49848-addressable-advertising-boom-across-regions-platforms-forecast-rethink-tv/

Awad, N.F., and Krishnan, M.S. (2006), “The personalization privacy paradox: An empirical evaluation of information transparency and the willingness to be profiled online for personalization”, MIS Quarterly, 30, (1), 13–28.

Benlian, A. (2015), “Web personalization cues and their differential effects on user assessments of website value”, Journal of Management Information Systems, 32 (1), 225–260.

Binet, L., & Field, P. (2009), “Empirical Generalizations about Advertising Campaign Success”, Journal of Advertising Research, 49(2), 130–133.

Binet, L., & Field, P. (2013), “Advertising effectiveness: the long and the short of it”, London:

Institute of Practitioners in Advertising.

Briggs, R., Krishnan, R., & Borin, N. (2005), “Integrated multichannel communications strategies: evaluating the return on marketing objectives – The case of the 2004 Ford F-150 Launch,” Journal of Interactive Marketing, 19, 81–90.

Chen, G., Tianfu W., and Peihong X. (2019), “Understanding Programmatic Creative: The Role of AI,” Journal of Advertising, 48 (4), 347–355.

CIGI-Ipsos (2019). 2019 CIGI-Ipsos Global Survey on Internet Security and Trust. [Report] Retrieved March 2020 from www.cigionline.org/internet-survey-2019.

Clement J. (2019). Share of internet users who are more concerned about their online privacy compared

to a year ago as of February 2019, by country. [Graph]. Retrieved March 2020 from https://www.statista.com/statistics/373322/global-opinion-concern-online-privacy/

Coeymans J. (2020, February 20). Personal interview.

Coppens (2005). TV reclame kost minder bij 27 graden [Newspaper Article]. Retrieved 2020 from Nieuwsblad: https://www.nieuwsblad.be/cnt/gtmfsuf0

Corvin A. (2019). Addressable Advertising: Who’s doing what, and why [Blog]. Retrieved 2020 from

IBC: https://www.ibc.org/monetise/addressable-advertising-whos-doing-what-and-why/5123.article

Culnan, M. J., & Armstrong, P. K. (1999), “Information privacy concerns, procedural fairness, and impersonal trust: An empirical investigation,” Organization Science, 10(1), 104–115.

Deng, Y. & C. F. Mela (2018), “TV viewing and advertising targeting”, Journal of Marketing Research, 55, 99-118.

Du, R., Xu, L. & Wilbur, K. (2019), “Immediate Responses of Online Brand Search and Price Search to TV Ads,” Journal of Marketing, 83 (4), 81-200.

eMarketer Editors (2019). TV Will Drop Below 25% Of Total US Ad Spending By 2022 [Article]. Retrieved 2020 from eMarketer:

https://www.emarketer.com/content/tv-will-drop-below-25-of-total-us-ad-spending-by-2020

Feldman D. (2018). US TV Ad Spend Drops As Digital Ad Spend Climbs To $107B In 2018 [Article]. Retrieved 2020 from Forbes: https://www.forbes.com/sites/danafeldman/2018/03/28/u-s-tv-ad-spend-drops-as-digital-ad-spend-climbs-to-107b-in-2018/#7e1a380d7aa6

Fitzgerald T. (2019). Cord Cutting Is About To Go Way, Way Up [Article]. Retrieved 2020 from Forbes: https://www.forbes.com/sites/tonifitzgerald/2019/08/06/cord-cutting-is-about-to-go-way-way-up/#51cf13f7337e

Gartner (2018). Gartner Hype Cycle for Digital Marketing and Advertising [Image]. Retrieved 2020 from SmartInsights: https://www.smartinsights.com/wp-content/uploads/2017/11/Latest-gartner-digital-marketing-and-advertising-hype-cycle.png

Gartner (2018). Top 10 Strategic Technology Trends for 2019 [Report]. Retrieved 2020 from https://www.gartner.com/en/doc/3891569-top-10-strategic-technology-trends-for-2019

Global Web Index (2019). Digital vs Traditional Media Consumption [Report]. Retrieved March 2020 from https://www.globalwebindex.com/reports/traditional-vs-digital-media-consumption?__hstc=194337778.58c16beeee360a38cb0673faf59f6cef.1584009410614.1584009410614.

1584009410614.1&__hssc=194337778.1.1584009410615&__hsfp=3406135548

BIBLIOGRAPHY

33

Guitart, I.A., Hervet, G. & Gelper, S. (2019), “Competitive advertising strategies for programmatic television”, J. of the Acad. Mark. Sci.

Guttmann A. (2019). Global advertising market – Statistics & Facts [Report]. Retrieved 2020 from Statista: https://www.statista.com/topics/990/global-advertising-market/

Guttmann A. (2019). Upfront TV advertising spending in the U.S. 2018/19, by industry [Report]. Retrieved 2020 from Statista: https://www.statista.com/statistics/1048831/upfront-tv-ad-spend-category-us/

Heath, R. (2009), “Emotional engagement: how television builds big brands at low attention”, Journal of Advertising Research, 49, 1, pp. 62–73.

Herhold K. (2017). How Consumers View Advertising: 2017 Survey [Blog]. Retrieved 2020 from https://clutch.co/agencies/resources/how-consumers-view-advertising-survey-2017

Invidi (2020). Advertiser Benefits [Blog]. Retrieved 2020 from https://www.invidi.com/addressable-advertising/advertiser-benefits/

Invidi. Advertising Glossary [Webpage]. Retrieved 2020 from https://www.invidi.com/resources/advertising-glossary/

Joo, M., Wilbur, K.C., Cowgill, B. & Zhu, Y. (2014), “Television Advertising and Online Search,” Management Science, 60 (1), 56-73.

Joris, G., Poels, K., Mechant, P., Pabian, S., & De Marez, L. (2018). 'Meet the blockers': Youth, young adults and automatic ad avoidance online. Tijdschrift voor Communicatiewetenschap, 46(4), 320-+.

Karwatzki, S., Dytynko, O., Trenz, M., & Veit, D. (2017), “Beyond the personalization–privacy paradox: Privacy valuation, transparency features, and service personalization”, Journal of Management Information Systems, 34 (2), 369–400.

Lafayette J. (2019). GroupM Sees TV Ad Spending Falling Long Term [Article]. Retrieved 2020 from Broadcasting+Cable: https://www.broadcastingcable.com/news/groupm-sees-tv-ad-spending-falling-long-term

Lawler, B. (2019). Five global trends in data ethics and privacy in 2019 [Article]. Retrieved 2020 from Looker: https://looker.com/blog/big-data-ethics-privacy

Liaukonyte, J., Teixeira, T. & Wilbur, K.C. (2015), “Television Advertising and Online Shopping,” Marketing Science, 34 (3), 311–30

Loesche D. (2017). Digital (Finally) Killed the TV Star [Report]. Retrieved 2020 from Statista: https://www.statista.com/chart/12136/worldwide-digital-and-tv-ad-spending/

Lovely S. (2019). Google Search Analysis Suggests That Cord Cutting Is a Growing Trend, Not a Dying One [Article]. Retrieved 2020 from CordCutting: https://cordcutting.com/news/google-search-analysis-suggests-that-cord-cutting-is-a-growing-trend-not-a-dying-one/

Malthouse, Edward C., Ewa Maslowska, & Judy U. Franks (2018), “Understanding Programmatic TV Advertising,” International Journal of Advertising, 37 (5), 769–784.

Martin, K. D., & Murphy, P. E. (2017), “The role of data privacy in marketing,” Journal of the Academy of Marketing Science, 1–21.

Moore, J.H. (1993), “Predators and Prey: A new ecology of competition”, Harvard Business Review, May/June, 1993.

Moulding J. (2020). Future TV Advertising Global 2019: The big takeaways [Article]. Retrieved 2020 from Videonet: https://www.v-net.tv/2020/01/06/future-tv-advertising-global-2019-the-big-takeaways/

Nielsen. Television Audience Measurement Glossary. Retrieved 2020 from https://www.nielsentam.tv/glossary2/glossaryquery.asp?type=alpha&jump=none#alphaJ

Nielsen (2019). The Nielsen Total Audience Report [Report]. Retrieved 2020 from https://s3.amazonaws.com/media.mediapost.com/uploads/NielsenTotalAudienceReportQ12019.pdf#

Nielsen (2019). The Age of Dissonance [Report]. Retrieved 2020 from http://go.nielsen.com/marketingreport

Norberg, P.A., Horne, D.R., & Horne, D.A. (2007), “The privacy paradox: Personal information disclosure intentions versus behaviors”, Journal of Consumer Affairs, 41 (1), 100– 126.

Peterson T. (2019). Agency ad buyers say there isn’t enough addressable TV inventory [Article]. Retrieved 2020 from Digiday: https://digiday.com/marketing/agency-ad-buyers-say-isnt-enough-addressable-tv-inventory/

Pfeiffer, M. & Zinnbauer, M. (2010), “Can old media enhance new media? How traditional advertising pays off for an online social network”, Journal of Advertising Research, 50 (1), 42-49.

Pidgeon B. & Moulding J. (2019). The Future of TV Advertising Global: Post-Conference Report.

Richter F. (2019), The Generation Gap in TV Consumption [Article]. Retrieved 2020 from Statista: https://www.statista.com/chart/15224/daily-tv-consumption-by-us-adults/

SBS (2019). Addressable TV in Vlaanderen: een stappenplan [White paper]. Retrieved 2019 from SBS: https://www.sbsbelgium.be/hoewerktaddressabletvadvertising

34

Segijn, C., Voorveld, H. & Smit, E. (2016), “The Underlying Mechanisms of Multiscreening Effects”, Journal of Advertising, 45 (4), 391-402

Shiller, B., Waldfogel,J. & Ryan, J. (2017), “Will Ad Blocking Break the Internet?”, National Bureau of Economic Research Working Paper 23058.

Sky (2019). AdSmart: Five years and forward [Report]. Retrieved 2019 from Sky:

https://www.skymedia.co.uk/wp-content/uploads/2019/08/The-AdSmart-White-Paper-2019.pdf?status=complete&dl=1

Starry (2019). Cord Cutting on the Rise: 9 Stats and Trends [Blog]. Retrieved 2020 from https://starry.com/blog/inside-the-internet/cord-cutting-stats-and-trends

Statista Research Department (2016). TV advertising expenditure worldwide from 2010 to 2020 [Report]. Retrieved 2020 from Statista: https://www.statista.com/statistics/273713/global-television-advertising-expenditure/

Tallariti C. (2020). The Brand Safety Challenge in Digital Advertising [Article]. Retrieved March 2020 from https://www.thedrum.com/news/2020/02/17/the-brand-safety-challenge-digital-advertising

Thirumalai, S., & Sinha, K.K. (2013), “To personalize or not to personalize online purchase interactions: Implications of self-selection by retailers”, Information Systems Research, 24 (3), 683–708.

Think TV (2017). The Benchmark Series: Visibility – the attribute that really matters [Report]. Retrieved 2020 from https://3ntx2j1ixpst401wzg360pah-wpengine.netdna-ssl.com/wp-content/uploads/2019/09/ThinkTV_Viewability-1.pdf

Think TV (2017). The Benchmark Series: Does Emotional Advertising Aid Advertising Effectiveness [Report]. Retrieved 2020 from https://3ntx2j1ixpst401wzg360pah-wpengine.netdna-ssl.com/wp-content/uploads/2019/09/ThinkTV_Emotions_public_v2.pdf

Vail, M. W., Earp, J. B., & Antón, A. I. (2008), “An empirical study of consumer perceptions and comprehension of web site privacy policies,” IEEE Transactions on Engineering Management, 55, 442–454.

Van Cauwenberge, A., Schaap, G. & van Roy, R. (2014), “TV No Longer Commands Our Full Attention: Effects of Second-Screen Viewing and Task Relevance on Cognitive Load and Learning From News”, Computers in Human Behaviour, 38, 100-109

Vlaamse regulator voor de media (2018). Media concentratie in Vlaanderen [Report]. Retrieved 2018

from https://www.mediaspecs.be/wp-content/uploads/2018/12/mediaconcentratierapport_2018_def.pdf

Watson A. (2019). Number of TV households worldwide from 2010 to 2018 [Graph]. Retrieved 2020 from Statista: https://www.statista.com/statistics/268695/number-of-tv-households-worldwide/

Wilbur, K. C. (2008), “How the digital video recorder changes traditional television advertising”, J. Advertising, 37 (1), 143–149.

Wirtz and Lin (2009), “Regulatory focus theory, trust, and privacy concern”, Journal of Service Research, 20, 1–18.

Xu, H., Teo, H.-H., Tan, B.C.Y., & Agarwal, R. (2009), “The role of push–pull technology in privacy calculus: The case of location-based services”, Journal of Management Information Systems, 26 (3), 135–173.

Young, K. (2017). Why Traditional Media Is King For Building Your Brand Following [Blog]. Retrieved 2020 from https://blog.globalwebindex.com/marketing/building-brand-following/

Zimmer, J.C., Arsal, R., Al-Marzouq, M., Moore, D., & Grover, V. (2010), “Knowing your customers: Using a reciprocal relationship to enhance voluntary information disclosure”, Decision Support Systems, 48 (2), 395–406.

35

CONTACT US

LEEN DE SCHAEPDRIJVER

Doctoral researcher

E: leen.deschaepdrijver@vlerick.com

PHILIPPE BAECKE

Professor in Marketing

E: philippe.baecke@vlerick.com

WWW.VLERICK.COM

36